(Alliance News) - Harbour Energy PLC on Thursday said it had reached an agreement with BASF SE and LetterOne to acquire "substantially all" of the Wintershall Dea's upstream assets.
Shares in Harbour Energy were up 28% at 312.20 pence each in London on Thursday afternoon, while BASF shares were 0.8% higher at EUR48.59 each in Frankfurt.
Harbour Energy, a London-based oil and gas company with operations in the UK North Sea, Norway, Mexico, Indonesia and Vietnam, will pay the two Wintershall shareholders USD11.20 billion in cash and shares for the portfolio.
This USD11.20 billion offer comprises the porting of existing Wintershall Dea bonds with a nominal value of USD4.90 billion to Harbour.
Approximately 921.1 million new Harbour shares will be issued to Wintershall shareholders at a price of 360.00 pence each, amounting to an value of USD4.15 billion. This represents a premium of around 60% to Harbour's 30-day weighted average of roughly 227.00 pence as of December 20.
BASF, a 73% shareholder in Wintershall Dea, will own 47% of Harbour's listed shares, with Harbour's current shareholders retaining 53%.
LetterOne, a 27% shareholder in Wintershall, will be given 251.5 million non-voting, non-listed convertible shares with preferential rights. Should these shares be converted, subject to relevant regulatory approvals, Harbour's current shareholders' stake would drop to 45.5%, while BASF and LetterOne would own 39.6% and 14.9%, respectively.
The deal also involves a cash consideration of USD2.15 billion, to be funded through cash flow generated by the Wintershall portfolio between the effective date of June 30 and completion.
The acquisition will be conditional upon shareholder approval and Harbour expects to convene a shareholder meeting in the first half of 2024. Completion of the acquisition is expected to occur in the fourth quarter of 2024.
The targeted portfolio of Wintershall Dea, a German gas and oil company, includes its upstream assets in Norway, Germany, Denmark, Argentina, Mexico, Egypt, Libya and Algeria. Harbour energy will also acquire the company's CO2 capture and storage licences in Europe.
All Wintershall assets located or held in joint ventures with Russian companies are excluded from the acquisition. On Wednesday, Russian President Vladimir Putin ordered that Wintershall be stripped of its stake in its Siberian extraction projects.
Harbour said that the deal will transform it into "one of the world's largest and most geographically diverse independent oil and gas companies."
Wintershall's "high quality assets" will add more than 300,000 barrels of oil equivalent per day to Harbour's production rate, which will increase to 500,000 following completion.
It will also increase its combined total proven and provable reserves to 1.5 billion barrels of oil equivalent at USD10 per barrel.
This will lead to a combined revenue of USD5.13 billion and earnings before interest, tax, depreciation, amortisation and exploration of USD3.67 billion for the six months ended June 30, 2023.
The group termed the acquisition "a strong strategic fit", which will offer a "transformational value-creating opportunity for Harbour's shareholders".
Wintershall's assets will support an increase in Harbour's annual dividend from USD200.0 million to around USD455.0 million. Of this, around USD380.0 million will be paid to holders of shares in Harbour, reflecting an increase of 5% in dividend per share to 26.25 cents.
Harbour's Chief Executive Officer Linda Cook said: "Today's announcement marks Harbour's fourth major acquisition and the most transformational step yet in our journey to build a uniquely positioned, large-scale, geographically diverse independent oil and gas company."
By Hugh Cameron, Alliance News reporter
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